Regional overview: enterprises’ modernization

Belarusian enterprises’ modernization is one of the key public state policies. Technical re-equipment should affect all production in the country: from dairy farms to petrochemical companies. More than half of the Belarusian population does not believe in the modernization programme’s effectiveness.

Independent Institute for Socio-Economic and Political Studies, published March public polls details. The study shows that one-third believes in effective use of modernization funds, 28.1% believe that these funds will be stolen. At the same time, only 35.4% believe in technological breakthrough in Belarus’ economy in the next 10 years, and over 40% doubt it.

The population’s attitude is due to the fact that the ‘modernization’ programme is almost 10 years old. A number of regional investment projects were launched yet in 2006 (for example, modernization of Mogilevkhimvolokno), but the expected economic effects had not occurred.

The ultimate goal of the modernization programme is “to increase the standard of living significantly by improving labour efficiency”. The programme envisages increases in revenue per employee, value added, productivity growth, etc all of which should guarantee wages at USD 1,000 by 2015. In 2015 compared to 2011 the growth in revenue per employee is expected to increase by 1.6 times, value added per worker by 2 times. It is planned that the nominal salary will increase from BYR 2 million to BYR 7.1 million.

Despite the ambitious modernization plans, it is feared that they will not be met due to the lack of foreign investment, stalled privatization and administrative-command economic management style. In fact, the modernization programme is based on regional development programmes, prepared by ministries without taking into consideration the market environment and aiming at the quantitative indicators growth using borrowed funds.

Therefore, currently, the main obstacle to the modernization programme implementation is the lack of funding from investment projects. Russia seems to be the only source for the modernization programme. But Russia might be interested in the Belarusian companies’ modernization only if she has total control over them, in order to continue integrating the Belarusian enterprises in her production chain.